Amended & Restated Golden Eagle Earn-in Agreement

Exhibit 10.11(a)


AMENDED AND RESTATED


GOLDEN EAGLE


EARN-IN AGREEMENT


between


SANTA FE PACIFIC GOLD CORPORATION


and


HECLA MINING COMPANY


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TABLE OF CONTENTS


ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2


ARTICLE II - REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Hecla's Representations . . . . . . . . . . . . . . . . . . . . 4
2.3 Santa Fe's Representations and Warranties . . . . . . . . . . . 7
2.4 Materiality of Representations . . . . . . . . . . . . . . . . 8


ARTICLE III - TERM OF EARN-IN AGREEMENT . . . . . . . . . . . . . . . . . 8


ARTICLE IV - RELATIONSHIP OF THE PARTIES . . . . . . . . . . . . . . . . 8
4.1 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Federal Tax Elections and Allocations . . . . . . . . . . . . . 9
4.3 State Income Tax . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Other Business Opportunities . . . . . . . . . . . . . . . . . 9
4.6 Waiver of Right to Partition . . . . . . . . . . . . . . . . . 10
4.7 Transfer or Termination of Rights to Properties . . . . . . . . 10
4.8 Implied Covenants . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 10


ARTICLE V - INITIAL CONTRIBUTION . . . . . . . . . . . . . . . . . . . . 10
5.1 Initial Payment and Contributions; Earn-in Expenditures;
Feasibility Study . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Reasonable Earn-in Expenditures . . . . . . . . . . . . . . . . 11
5.3 Identification of Earn-in Expenditures Upon Presentation of
Feasibility Study . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Addition of Mineral Properties to Operating Agreement . . . . 12


ARTICLE VI - MANAGEMENT COMMITTEE . . . . . . . . . . . . . . . . . . . . 12
6.1 Organization and Composition . . . . . . . . . . . . . . . . . 12
6.2 Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


ARTICLE VII - PROGRAMS AND BUDGETS . . . . . . . . . . . . . . . . . . . 13
7.1 Preparation, Presentation and Content of Programs and Budgets . 13
(a) Content of Programs . . . . . . . . . . . . . . . . . . . 13
(b) Content of Budgets . . . . . . . . . . . . . . . . . . . . 13
7.2 Submittal and Approval of Proposed or Modified Programs and
Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14


ARTICLE VIII - MAINTENANCE AND ABANDONMENT OF MINERAL PROPERTIES . . . . 14
8.1 Maintenance of Mineral Properties and Underlying Agreements . . 14
8.2 Assessment Work or Fees . . . . . . . . . . . . . . . . . . . . 14
8.3 Abandonment of Mineral Properties . . . . . . . . . . . . . . . 15


ARTICLE IX - AREA OF INTEREST . . . . . . . . . . . . . . . . . . . . . . 15


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9.1 Proposed Acquisition of Mineral Properties . . . . . . . . . . 15
9.2 Election to Acquire Mineral Properties . . . . . . . . . . . . 16
9.3 Excluded Acquisition . . . . . . . . . . . . . . . . . . . . . 16
9.4 Area of Interest Properties Owned or Controlled by Hecla . . . 16


ARTICLE X - WITHDRAWAL AND TERMINATION . . . . . . . . . . . . . . . . . 19
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 Santa Fe's Election to Withdraw and Terminate . . . . . . . . . 19
10.3 Termination Upon Contribution of Mineral Properties to the
Operating Agreement . . . . . . . . . . . . . . . . . . . . . . 19
10.4 Failure to Provide Feasibility Study . . . . . . . . . . . . . 20
10.5 Removal of Property . . . . . . . . . . . . . . . . . . . . . . 20


ARTICLE XI - OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.1 Parameters for Santa Fe's Earn-in Activities . . . . . . . . . 20
11.2 Surface and Surface Facilities . . . . . . . . . . . . . . . . 21
11.3 Compliance With Laws and Agreements . . . . . . . . . . . . . . 22
11.4 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 23


ARTICLE XII - RECLAMATION . . . . . . . . . . . . . . . . . . . . . . . . 24


ARTICLE XIII - REPORTING, INSPECTION AND AUDIT . . . . . . . . . . . . . 26


ARTICLE XIV - MEMORANDUM . . . . . . . . . . . . . . . . . . . . . . . . 27


ARTICLE XV - DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 27


ARTICLE XVI - CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . 28
16.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.3 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . 29
16.4 Duration of Confidentiality . . . . . . . . . . . . . . . . . . 29


ARTICLE XVII - TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17.1 Reimbursement for Taxes . . . . . . . . . . . . . . . . . . . . 29
17.2 Provisions Concerning Taxation . . . . . . . . . . . . . . . . 29


ARTICLE XVIII - COOPERATION . . . . . . . . . . . . . . . . . . . . . . . 30


ARTICLE XIX - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 30
19.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
19.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.3 Modification . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.4 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.6 Rule Against Perpetuities . . . . . . . . . . . . . . . . . . . 32
19.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 33
19.8 Entire Agreement; Amendments; Successors and Assigns . . . . . 33


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19.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 33
19.10Paragraph Headings . . . . . . . . . . . . . . . . . . . . . . 33


EXHIBITS


EXHIBIT A: PROPERTIES TO BE CONTRIBUTED BY HECLA


EXHIBIT B: TAX MATTERS


EXHIBIT C: AREA OF INTEREST


EXHIBIT D: EXPENDITURE SCHEDULE


EXHIBIT E: SPECIAL WARRANTY DEED


EXHIBIT F: OPERATING AGREEMENT


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AMENDED AND RESTATED GOLDEN EAGLE EARN-IN AGREEMENT


This Amended and Restated Earn-in Agreement is made as of September, 6, 1996 between SANTA FE PACIFIC GOLD CORPORATION, a Delaware corporation ("Santa Fe"), and HECLA MINING COMPANY, a Delaware corporation ("Hecla").


RECITALS


A. Hecla owns or controls certain lands in Ferry County, State of Washington, as described in Exhibit A Part 1 and defined as "Hecla's Properties" in Section 1.8. Hecla also owns and controls certain lands as described in Exhibit A Part 2 and defined as the "Joint Properties" in Section 1.9. Hecla desires to contribute Hecla's Properties to the purposes of this Earn-in Agreement.


B. Santa Fe desires to immediately acquire an undivided 75% interest in the Joint Properties described in Exhibit A Part 2, and to acquire the right to receive conveyance of an undivided 75% interest in Hecla's Properties, for which Santa Fe shall make payment of $2,500,000 to Hecla.


C. Santa Fe further desires to make certain expenditures on or for the benefit of the Mineral Properties as may be reasonable or necessary to enable Santa Fe to provide Hecla with a Feasibility Study.


D. Santa Fe and Hecla desire to enter into the Operating Agreement attached hereto as Exhibit F, on the terms and conditions hereinafter set forth.


In consideration of the promises set forth below, Hecla and Santa Fe agree to the provisions of this Earn-in Agreement.


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ARTICLE I


DEFINITIONS


1.1 "Affiliate" means any person, partner, partnership, joint venture, limited liability company, corporation or other form of enterprise which directly or indirectly controls, is controlled by, or is under common control with Santa Fe or Hecla. For purposes of the preceding sentence, "control" means possession, directly or indirectly, of the power to direct or cause direction of management and policies through ownership of voting securities, contract, voting trust or otherwise.


1.2 "Area of Interest" means the area described in Exhibit C. The Joint Properties shall not be deemed to be subject to this Earn-in Agreement or part of the Area of Interest for purposes of this Earn-in Agreement.


1.3 "Earn-in Activities" means all activities on or for the benefit of the Mineral Properties giving rise to Earn-in Expenditures.


1.4 "Earn-in Agreement" means this Amended and Restated Golden Eagle Earn-in Agreement.


1.5 "Earn-in Expenditures" means those expenditures on or for the benefit of the Mineral Properties as defined in Exhibit D or as specified in the terms of this Earn-in Agreement.


1.6 "Effective Date" means the effective date of this Earn-in Agreement, September 6, 1996.


1.7 "Feasibility Study" means a study of the feasibility of developing and operating a mine on the Mineral Properties, or the Mineral Properties and Joint Properties, as the case may be, including an analysis of economic, engineering, environmental, regulatory and


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other considerations, and containing the level of detail customary in the industry for a bankable feasibility study which may, if necessary, be presented to financial institutions for the purpose of seeking and ultimately obtaining financing for the development of a mine.


1.8 "Hecla's Properties" means those properties described in Exhibit A Part 1.


1.9 "Joint Properties" means those properties described in Exhibit A Part 2, in which Santa Fe shall immediately acquire an undivided 75% interest from Hecla upon payment of $2,500,000 to Hecla hereunder.


1.10 "Mineral Properties" means Hecla's Properties and any other interests in real property within the Area of Interest which are made subject to the terms of this Earn-in Agreement after the Effective Date. The Joint Properties are not Mineral Properties for purposes of this Earn-in Agreement.


1.11 "Operating Agreement" means that agreement, attached to this Earn-in Agreement as Exhibit F, which is to be entered into immediately between Santa Fe and Hecla for purposes of operating the Joint Properties, and to which the Mineral Properties may be added upon Santa Fe's fulfillment of the requirements set out in Article V of this Earn-in Agreement.


1.12 "Parties" means Hecla and Santa Fe.


1.13 "Term" means the term of this Earn-in Agreement as defined in Article III.


ARTICLE II


REPRESENTATIONS


2.1 CAPACITY. Each of the Parties represents as follows:


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(a) that it is a corporation duly incorporated and in good
standing in its state or jurisdiction of incorporation and that it is
qualified to do business and is in good standing in those states or
jurisdictions where necessary in order to carry out the purposes of this
Earn-in Agreement;


(b) that it has the capacity to enter into and perform this
Earn-in Agreement and all transactions contemplated herein and that all
corporate and other actions required to authorize it to enter into and
perform this Earn-in Agreement have been properly taken;


(c) that it will not breach any other agreement or
arrangement by entering into or performing this Earn-in Agreement; and


(d) that this Earn-in Agreement has been duly executed and
delivered by it and is valid and binding upon it in accordance with its
terms.


2.2 HECLA'S REPRESENTATIONS AND WARRANTIES. Hecla represents and warrants that to the best of its information, knowledge and belief, with respect to Hecla's Properties and the Joint Properties:


(a) Hecla is in exclusive possession of such properties;


(b) Subject to the paramount title of the United States, (i)
the unpatented mining claims were properly laid out and monumented; (ii)
all required location work was properly performed; (iii) location
notices and certificates were properly recorded and filed with
appropriate governmental agencies; (iv) all assessment work has been
performed, or fee payments in lieu thereof made, as required to hold the
unpatented mining claims through the assessment year ending August 31,
1995; (v) all


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affidavits of assessment work and other filings required to maintain the
claims in good standing have been properly and timely recorded or filed
with appropriate governmental agencies; (vi) the claims are free and
clear of defects, liens or encumbrances arising by, through or under
Hecla except for those found of public record or identified on Exhibit A
hereto; (vii) there are no conflicting claims; and (viii) there are no
pending or threatened actions, suits or proceedings involving the mining
claims.


(c) Hecla's Properties and the Joint Properties are free and
clear of all defects, liens and encumbrances except for those found of
public record or identified on Exhibit A hereto and except for those
which would not have a material adverse effect on the usage contemplated
herein;


(d) there is no judgment outstanding or litigation,
proceeding or governmental investigation pending or threatened against
Hecla, its Affiliates, Hecla's Properties or the Joint Properties,
which would have a materially adverse effect on the title or interest of
Hecla in or to Hecla's Properties and the Joint Properties or Hecla's
power or right to sell, convey, transfer or assign the mineral estate
in such properties, nor has Hecla received any communication asserting
or threatening any adverse claim to any part of such properties other
than as specified herein;


(e) Hecla has made available to Santa Fe all information and
data regarding the existence of minerals within Hecla's Properties and
the Joint Properties, and all information concerning record, possessory,
legal or equitable title to such properties which is within Hecla's
knowledge, possession or control;


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(f) Hecla has fully informed and disclosed to Santa Fe (i)
the occurrence of, and circumstances surrounding, any release, spill,
discharge, leak, emission, escape, dumping or any material release of
any kind of any toxic or hazardous substances as defined under any
local, state or federal regulation, laws or statutes, from, on, in or
under Hecla's Properties and the Joint Properties or into any
environment surrounding such properties, except for those releases
permissible under such regulations, laws or statutes; (ii) any storage
or disposal of toxic or hazardous substances or toxic or hazardous
wastes on, at or related to such properties; and (iii) all pending or
threatened litigation or enforcement proceedings relating to such
properties or to Hecla's operations conducted at any time within the
Area of Interest.


(g) Hecla is in compliance in all material respects with all
federal, state and local laws, rules and regulations relating to or
affecting Hecla's Properties and the Joint Properties, and has obtained,
maintained in full force and effect, and operated in substantial
compliance with all authorizations, licenses, permits, easements,
consents, certificates and orders of any governmental or regulatory body
relating to or affecting such properties except as disclosed in this
Earn-in Agreement; and operations of Hecla and its agents or contractors
on, at, or related to such properties have not resulted in any
substantial violations of federal, state or local laws, rules,
regulations, ordinances or orders which would have a material adverse
effect on the usage contemplated herein;


(h) Other than as specified in Exhibit A, there are no
existing mineral production or other royalties of any kind which are
payable with respect to Hecla's Properties or the Joint Properties or
mineral substances mined therefrom;


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(i) neither Hecla nor any of its Affiliates is a party to or
has any knowledge of any existing oral or written agreement of any kind
which does or could have a material adverse impact on record or
possessory title to the mineral estate on Hecla's Properties, the Joint
Properties, and/or the exploration, development or mining of same;


(j) there are no existing restrictions which would have a
material adverse effect on the right to explore, develop and mine
mineral substances from Hecla's Properties or the Joint Properties,
excluding restrictions contained in applicable laws, statutes and
regulations; and


(k) Hecla is unaware of any material facts or circumstances
which have not been disclosed to Santa Fe, which should be disclosed to
Santa Fe in order to prevent the representations in this Section 2.2
from being misleading.


2.3 SANTA FE'S REPRESENTATIONS AND WARRANTIES. Santa Fe represents and warrants that to the best of its information, knowledge and belief, with respect to Santa Fe's activities on Hecla's Properties and the Joint Properties prior to entry into this Earn-in Agreement, Santa Fe has been and remains in compliance in all material respects with all federal, state and local laws, rules and regulations relating to or affecting its activities, and activities of Santa Fe and its agents or contractors on, at, or related to such properties have not resulted in any substantial violations of federal, state or local laws, rules, regulations, ordinances or orders which would have a material adverse effect on the usage contemplated herein.


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2.4 MATERIALITY OF REPRESENTATIONS. All representations and warranties made in this Article II are material to this Earn-in Agreement and the Parties' intent in entering into it.


ARTICLE III


TERM OF EARN-IN AGREEMENT


The Term of this Earn-in Agreement shall commence as of the Effective Date and shall terminate in accordance with Section 5.1(c) and 10.3, unless the Earn-in Agreement is terminated earlier pursuant to Article X or extended by amendment upon the Parties' mutual written agreement.


ARTICLE IV


RELATIONSHIP OF THE PARTIES


4.1 NO PARTNERSHIP. Nothing contained in this Earn-in Agreement shall be deemed to constitute any Party the partner of another, nor, except as otherwise herein expressly provided, to constitute any Party the agent or legal representative of another, nor to create any fiduciary relationship between or among them. It is not the intention of the Parties to create, nor shall this Earn-in Agreement be construed to create, any mining, commercial or other partnership other than the tax partnership referenced in Section 4.2. No Party shall have any authority to act for or to assume any obligation or responsibility on behalf of any other Party, except as otherwise expressly provided herein. The rights, duties, obligations and liabilities of the Parties shall be several and not joint or collective. Each Party shall be responsible only for its obligations as herein set out and shall be liable only for its share of the costs and expenses as provided herein, it being the express purpose and intention of the Parties that their ownership of assets and the rights acquired hereunder shall be as tenants in common. Each Party shall


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indemnify, defend and hold harmless each other Party, its directors, officers, employees, agents and attorneys from and against any and all losses, claims, damages and liabilities (including litigation costs and attorneys' fees) arising out of any act or any assumption of liability by the indemnifying Party, or any of its directors, officers, employees, agents and attorneys done or undertaken, or apparently done or undertaken, on behalf of any other Party, except pursuant to the authority expressly granted herein or as otherwise agreed in writing among the Parties.


4.2 FEDERAL TAX ELECTIONS AND ALLOCATIONS. Without changing the effect of Section 4.1, the Parties agree that their relationship pursuant to this Earn-in Agreement shall constitute a tax partnership within the meaning of Section 761(a) of the United States Internal Revenue Code of 1986, as amended. Tax elections and allocations shall be made as set forth in Exhibit B to this Earn-in Agreement, which is attached hereto and made a part hereof. The tax partnership shall not survive the Term of this Earn-in Agreement and shall continue only if unanimously agreed by the Parties to the Operating Agreement.


4.3 STATE INCOME TAX. The Parties also agree that, to the extent permissible under applicable law, their relationship shall be treated for state income tax purposes in the same manner as it is for Federal income tax purposes.


4.4 TAX RETURNS. The Tax Matters Partner, as defined in Exhibit B to this Earn-In Agreement, shall prepare and file any tax returns or other tax forms required.


4.5 OTHER BUSINESS OPPORTUNITIES. Except as expressly provided in this Earn-in Agreement, each Party shall have the right independently to engage in and receive full benefits from business activities, whether or not competitive with the operations under this Earn-in Agreement, without consulting any other Party. The doctrines of "corporate opportunity" or


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"business opportunity" shall not be applied to any other activity, venture, or operation of any Party, and, except as otherwise provided in this Earn-in Agreement, no Party shall have any obligation to any other with respect to any opportunity to acquire any property at any time.


4.6 WAIVER OF RIGHT TO PARTITION. The Parties hereby waive and release all rights of partition, or of sale in lieu thereof, or other division of assets, including any such rights provided by statute.


4.7 TRANSFER OR TERMINATION OF RIGHTS TO PROPERTIES. Except as otherwise provided in this Earn-in Agreement, no Party shall transfer all or any part of its interest in the Mineral Properties or this Earn-in Agreement or otherwise permit or cause such interests to terminate.


4.8 IMPLIED COVENANTS. There are no implied covenants contained in this Earn-in Agreement other than those of good faith and fair dealing.


4.9 EMPLOYEES. Employees of the respective Parties are not and shall not be employees of the other Parties or of any venture which may be comprised of the Parties.


ARTICLE V


INITIAL CONTRIBUTION


5.1 INITIAL PAYMENT AND CONTRIBUTIONS; EARN-IN EXPENDITURES; FEASIBILITY STUDY.


(a) Upon execution of this Earn-in Agreement, Santa Fe shall make a nonrefundable payment of $2,500,000 to Hecla in exchange for immediate conveyance of a 75% undivided interest in the Joint Properties by special warranty deed (attached as Exhibit E) from Hecla, and the right to receive a good and sufficient deed of an undivided 75% interest in Hecla's Properties within 10 days of Santa Fe notifying Hecla (in writing) of its desire to receive such conveyance; Hecla hereby grants Santa Fe the right to such conveyance covering all or


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any part of Hecla's Properties at Santa Fe's sole election, without further exchange of consideration, which election may be made, if at all, at any time during the term of this Earn-in Agreement.


(b) Hecla has contributed Hecla's Properties for the purposes of this Earn-in Agreement, and Hecla need not make further contribution during the term o ...